Gottingen, August 01, 2007 – a substantial improvement of investor protection becomes concrete: future financial institutions require for the exercise of investment advice of the permission of the Federal Agency for financial services supervision (BFin). The changes in the law concerning the Kreditwesengesetz (KWG) go back briefly on the EU directive about markets and financial instruments (markets in financial instruments directive) – MiFID – implementing German is done now by the FRUG (financial markets directive implementation Act) and thus also in the KWG. The change in the law was already announced and comes into effect November 1. Investment advisors who make recommendations to their customers in particular stocks, certificates or similar securities-related transactions with certain financial instruments, are from November of supervision of BFin. As long as the recommendation is based on an examination of the personal circumstances of the investor or the investment is presented as suitable for him. This means when getting financial services customers submit concrete proposals for the sale, to the drawing or keeping of financial instruments, etc., that a change in the composition of the customer assets are coming and doing at least the impression that their recommendation takes into account the individual circumstances, say investment objectives and financial situation of the customer, are subject to stricter control by the BFin them. Except, if issued recommendations for the purchase of investment funds. Such purchase recommendations are exempted from the permit requirement in the future.
Affected by the new rules, all companies in the financial services industry – in addition to credit institutions, investment firms and exchange operators are first investment advisors, money managers, tied agents, and many more. While for companies that operate already permit financial service service, the permit is considered to be given, everyone else must look at either a MiFID or apply for a permit. It is not only the license requirements to Gadre lawyer specializing in capital market law says CEO Dr. Werner, Dr. Gundel & Collegen Rechtsanwaltsgesellschaft mbH in Gottingen, note". The new documentation requirements are just as important. All investment advisers are then obliged to archive for five years all data for documentation purposes, which itself can be, whether all reasonable steps were taken to performing the job to achieve the best for their customers. This includes incorporating all possibilities (also foreign markets, over-the-counter trading, etc.) in the decision and taking into account price, costs, speed, execution probability and processing, volume, type of order and of all other considerations relevant to the word sow management.
Also should be allocated also determined that, whether the specific investment decision to the risk profile, i.e. the financial conditions and experiences of each customer fits. According to gundel an important step in the right direction. "The liability restrictions mean not only a burden for companies, but mountains for those who in time convert your business and align also opportunities, to withdraw from the General market environment and to improve thereby the own competitive position and the relationship with customers." Remains to be seen as the expert, however, whether the new prudential requirements and the documentation obligations not to die out"of the independent investment and financial adviser will lead". Because alone the ongoing annual costs, triggered by result obligations as mandatory annual audit by a chartered accountant, Member of the EdW, regulatory reporting and compliance organization, can accumulate quickly on several ten thousand dollars a year.